On 5 December 2013, George Osborne’s Autumn Statement contained several new measures and confirmed a number of others regarding the taxation of businesses and individuals. A summary of some of the main measures follows:-
Employer National Insurance Contributions
From April 2015, employer national insurance contributions (NICs) will be abolished for those under 21 years of age on earnings up to £813 per week. Thereafter the normal rate of NICs will apply.
It had already been announced that an annual £2,000 Employment Allowance will be introduced from April 2014. This will need to be claimed and will be offset against employers’ NICs to reduce the overall cost of employing staff.
No new changes were announced, however, the main rate of corporation tax continues to reduce over the next two years. Small and large companies will pay a unified rate of 20% from 1 April 2015.
Several new measures have been announced which are dealt with in a separate article.
Personal tax and savings
From 6 April 2014, the basic personal allowance will increase by £560 to £10,000 which is the level agreed at the outset of the Coalition. Starting next year it is intended that this allowance will increase by the Consumer Price Index (CPI).
From 6 April 2014, the basic rate band on which 20% income tax is paid will reduce to £31,865.
From 2015/16, basic rate taxpayers will be able to transfer up to £1,000 of their income tax personal allowance to their spouse or civil partner. This will not be possible where either partner is a higher or additional rate tax payer.
The capital gains tax annual exemption is to be increased by £100 to £11,000 from 6 April 2014, but tax rates remain unchanged.
Changes to pensions from 2014/15 have already been widely publicised. The maximum annual contribution reduces from £50,000 to £40,000 from 6 April 2014 and the lifetime allowance reduces from £1.5m to £1.25m from the same date.
From October 2015 a new voluntary National Insurance contribution – Class 3A – will be introduced (for a limited period) to give people who reach state pension age before 6 April 2016 the chance to enhance their Additional State Pension.